Answer to Question #91708 in Macroeconomics for Unknown287159

Question

Use examples to explain the absolute advantage in international trade.your answer must have references.

Answer 1

Trade across the international boundaries including the exchange of capital, goods and services is called the international trade.

Advantages:

i) It is possible that service is costly in there own countries but then cheaper in other countries. So it is good to takes the services from other countries from economic points of view. Good example is Online tutoring services where the tutor registration is possible from all countries.

ii) It is possible for a good produced in a nation for which domestic opportunity cost is lower than that in other nations. So for a manufacture, it is good to exchange that goods in other nation where have higher domestic opportunities cost

iii) For a producer it is possible that requirement(demand) of manufactured products in own countries is less than other countries than it is good to sell that products in other countries

iv) Through these international trading we can improved political relations among nations, efficiency gains for domestic producers, lower prices and better product for consumers in different nations

v) The ability of a party to produce a particular good or service at a lower marginal and opportunity cost over another.

References: https://courses.lumenlearning.com/boundless-economics/chapter/introduction-to-international-trade/